Commentary

August 17, 2012

Planning finances pays off big-time

by Airman 1st Class GRACE LEE
56th Fighter Wing Public Affairs

For those living paycheck to paycheck or wondering where all the money goes every month, making a budget may be worth looking into.

Budgeting can allow for financial freedom, according to Cory Carmichael, 56th Force Support Squadron Airman and Family Readiness Center community readiness specialist.

“A properly executed budget with enough income to cover all spending allows us to meet prioritized goals,” he said. “If you fail to plan, you plan to fail.”

For Ronald Lewis, 56th FSS A&FRC community readiness consultant, the word budget can be intimidating.

“I prefer the term financial plan rather than budget because of the emotional overtones budget has for some people,” he said. “A financial plan provides a visible, concrete map of action. It should be proactive rather than reactive.”

Lewis suggests asking the following questions prior to making a plan.

What do I want to achieve financially?

Do I want to make a large future purchase like a car or house?

Do I want to send my children to college?

Do I want to retire and live comfortably?

While knowing what to budget for is imperative, it is equally important to have a savings account or emergency fund, Lewis said.

“The general rule for financial ease is to pay you first,” he said. “That means put enough money aside for emergency savings and investments. Ten percent of net income is a good rule of thumb for saving and investing, but more is better.”

Carmichael said flexibility is key, especially in the beginning.

“Be honest with yourself,” he said. “While it is hard to plan for every obstacle that people encounter, an emergency fund or savings in the budget makes life easier. And, never spend more than you earn. If you want to spend more money, then get a promotion or a part-time job.”

In addition, tracking expenses can prevent overspending.

“Review bank and credit card statements every month to see where the money is going,” Carmichael said. “Many people underestimate how much they really spend. While creating a budget won’t solve spending habits, it is an important step in determining financial fitness.”

Lewis advises starting a financial plan today.

“Be proactive,” he said. “Don’t wait until you have a budget problem to start looking at your financial situation.”

Although writing down a budget may work for one person, Lewis said there are other options available to keep track.

“Some budget programs let you use a basic version for a test period,” he said. “However, some people prefer paper and pencil plans. It depends on what works best for each individual.”

For more information, call (623) 856-6550. The A&FRC will assist Luke Air Force Base members with creating a budget or other financial-related issues.

“The A&FRC, in addition to having trained financial counselors, has publications, guides, classes and other resources to answer all financial questions,” Carmichael said. “We also provide one-on-one appointments to review and discuss budget and spending plans. Take the steps now to improve your financial fitness.”




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